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'Database level' versus 'instance level'

What is the difference between 'database level' and 'instance level' as you can see in Oracle documents? For example: use_stored_outline can be set at session level and instance level.

Actually the term database and instance are used pretty much interchangeably. But your question actually asked about database vs. instance and then used an example that was for session level vs. instance level. Maybe what you're asking is about the difference between ALTER SYSTEM and ALTER SESSION when trying to set/change configuration parameters and the like. If so, when you alter at a system level this means that the parameter change effects the entire instance (all users). But, when you alter at a session level, the change effects only the session to which you are logged in when you issue the command.

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